Europe open: Markets rise despite Sino-US friction; Powell hints at rate cuts

European stocks were higher on Wednesday morning even as US-China relations appeared to deteriorate, while the chairman of the US Federal Reserve indicated an openness to further interest rate cuts.

At 0857 BST, the Stoxx 600 was 0.3% higher at 379.82, as the German Dax rose by 0.6% to 12,038.21 and France's CAC 40 climbed by 0.4% to 5,476.34. London's FTSE 100 was up by 0.4% at 7,173.03.

Optimism for progress in Thursday's Sino-US trade talks was scant after Washington's state department slapped visa restrictions on Chinese government officials with alleged involvement in human rights abuses of Muslim minorities in the Xinjiang region.

Michael Hewson, analyst at CMC Markets, said: "With China yet to retaliate to these recent developments the prospect of any type of deal in the short term is becoming ever more remote, meaning that further tariff escalations are likely to be only a matter of time.

"As things stand further tariff increases on $250bn of Chinese goods automatically kick in on the 15th October, and this week’s resumption of trade talks don’t look like they will change that."

Fed chairman Jerome Powell hinted that further rate cuts could be made before the end of the year in a meeting on Tuesday night, saying the Fed will "act as appropriate to support continued growth, a strong job market, and inflation moving back to our symmetric 2pc objective".

Markets.com analyst Neil Wilson said: "CPI numbers out tomorrow could be a fly in the ointment, but the general uncertainty around the global economy and trade, combined with the slowing in the survey figures should keep the Fed on track to cut this year."

In Brexit news, German Chancellor Angela Merkel on Tuesday told British Prime Minister Boris Johnson that a deal was "overwhelmingly unlikely" unless Northern Ireland remains part of the customs union.

Among individual stocks, food delivery giants Takeaway and Just Eat topped the Stoxx 600 after the former said orders had increased by 87% during the third quarter.

Qiagen continued to fall after on Tuesday warning on sales due to weak third quarter trading in China.